Small caps continued their ugly action, as the Russell 2000 exchange-traded fund (IWM) fell 1.45%, and this time the senior indexes joined them, with the Nasdaq falling about 1%. Breadth was quite poor, as it moved close to three to one negative. A few names like Futu Holdings (FUTU) and Harley Davidson (HOG) caught some momentum, but once again, there was little life in the speculative names.
Some traders were hoping that money would rotate out of technically extended big caps and into the badly beaten up small caps, but there were no signs of that sort of action. Buyers just aren't brave enough to bottom fish broken small caps, when the big-cap names are seeing some corrective action.
Neither the indexes nor the business media are addressing some carnage in certain sectors of the market. Sectors like biotechnology and gambling have gone absolutely bidless, and there are no indications that support is forming yet.
The biggest problem right now is that there isn't any easy way for this market to resolve itself. Part of the market is already in a bear market, and another part of it is still just fractionally off all-time highs. It is unlikely that we are going to see a complete reversal of the recent rotation.
If everything was down equally, it would be much easier to navigate this market. We could look for support or capitulation, but the great bulk of big caps haven't even had a minor correction yet, so how could that signal some type of reversal?
It is a very messy situation, and we will just have to wait and see how the market reconciles some of the most significant divergences in many years.
Have a good evening. I'll see you tomorrow.